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Growth in UK construction picks up, optimism surges after election: Markit

[LONDON] Optimism among British construction firms hit a nine-year high last month after Prime Minister David Cameron scored an unexpectedly decisive election victory and growth in the sector recovered from a slowdown, a survey showed on Tuesday.

The Markit/CIPS UK Construction Purchasing Managers' Index (PMI) rebounded in May to 55.9 in May from April's 22-month low of 54.2, above the 50 mark that denotes growth and beating a Reuters poll forecast of 55.0.

Cameron's Conservative Party won a majority on May 7 and the share prices of Britain's biggest housebuilders have gained around 20 per cent since then.

"With a sustained period of policy uncertainty no longer on the horizon, business confidence surged back to its highest level since early 2006," said Tim Moore, senior economist at survey compiler Markit.

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The PMI also showed construction firms took on staff at the fastest rate in five months during May.

While the Markit/CIPS survey has pointed to solid growth in the construction industry since mid-2013, it has been at odds with much weaker official data.

Construction output fell 1.1 per cent in the first three months of 2015, according to economic growth figures released last week, having already contracted 2.2 per cent at the end of last year.

Markit said it was unclear if the upturn in confidence would translate into increased output volumes, noting that all parts of the construction industry have lost momentum over the past 12 months - even after taking May's PMI bounce into account.

A comparable survey on Monday showed British manufacturing activity inched higher in May after hitting a seven-month low in April but growth in factory jobs sank to a more than two-year low.